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UK Outlook for Pig Meat Supplies


09 May 2014

UK Outlook for Pig Meat Supplies - April 2014UK Outlook for Pig Meat Supplies - April 2014

Latest figures from Defra for the size of the UK pig herd in December 2013 contained some unexpected results.
Outlook for UK Pig Meat Supplies
AHDB

In particular, the further slight decline in the sow herd was something of a surprise, given the better financial position of producers in the second half of 2013. However, with producers having faced negative margins in most recent years, it is perhaps not so surprising that they have been cautious about any expansion plans. In addition, some producers who would like to expand have been prevented from doing so by planning or environmental constraints.

Looking at the figures in a bit more detail, the number of sows in-pig increased by 2% year on year but this was more than offset by an 11% decline for in-pig gilts. In addition, maiden gilt numbers fell by 10% on a year earlier, although it is worth noting that last year’s figure was particularly high and in fact maiden gilt numbers were up on December 2011. The number of suckling or dry sows was up by 2%. With higher sow numbers but fewer gilts, the figures suggest less sow replacement happened last year than in 2012, perhaps because the age profile of the herd is now younger.

The financial position of pig producers in the second half of 2013 was better than for several years, due to a combination of record pig prices and lower feed costs. Nevertheless, there are few signs that confidence has returned sufficiently to encourage producers to expand significantly. Therefore, we expect the breeding herd to remain broadly stable over the coming year. This is reinforced by the entry into administration of one of the country’s larger producers, which was announced at the end of last year. Any expansion in the medium term is likely to be modest, particularly as the planning and environmental constraints will remain in place.

Despite a stable to declining breeding herd, clean pig slaughterings in recent years have generally been on an upward trend. This is the result of steady improvements in sow productivity. This trend continued in 2013, with the number of pigs slaughtered per sow equivalent to around 23.0 per year, compared with 22.5 in 2012 and 21.6 in 2011. Productivity has improved at a fairly consistent rate over the last decade or so, with factors such as genetics, health, nutrition and herd management contributing. With the focus on improving productivity ongoing, the upward trend is expected to continue in future years. The higher performance of many other EU Member States confirms that there is still plenty of room to increase productivity further.

The decline in the breeding herd during 2012 meant that, following three years of steady growth, UK clean pig slaughterings were virtually unchanged in 2013. The impact of the smaller breeding herd is likely to continue to be felt in the first half of 2014, with little change in slaughterings expected. From the late summer onwards, however, with the breeding herd having stabilised, productivity gains are likely to reassert themselves as the main driver of the number of pigs being finished. This should lead to resumption of the upward trend in slaughterings, with growth of around 2% in the final quarter of 2014 and about 3% in 2015 forecast.

Sow slaughterings returned to more normal levels in 2013, following the inflated numbers in the second half of 2012. If anything, with a slightly younger herd than in previous years, slaughterings have been a little lower than in earlier years. Unless there are significant changes to feed or cull sow prices, throughputs should remain at similar levels to last year going forward.

Carcase weights were consistently higher than a year earlier in 2013 and this has continued into early 2014. Indeed they have been at record levels in the first three months of this year, as processors look for heavier pigs to offset tight pig supplies. While feed prices remain relatively low, weights are likely to remain relatively high. Further gradual rises are possible as genetic and nutritional improvements allow heavier weights without increasing back fat levels.

The increase in carcase weights meant that pig meat production in 2013 was 1% above the previous year’s level, despite the stable slaughterings. Looking ahead, with slightly higher slaughterings anticipated during 2014, production is set to rise by 2% this year to just under 850,000 tonnes.

Tight EU supplies, coupled with the increased consumer preference for British pork in the wake of horsegate, meant that the UK imported less pig meat in 2013 than the year before. Since late last year, EU pig prices have been well below UK prices, with the gap larger than it has been for many years. This hasn’t yet led to a marked increase in pig meat imports, suggesting that pork buyers are still focused on procuring British product.

Nevertheless, with domestic supplies remaining tight, any increase in consumer demand for pork will have to be satisfied by higher imports if price rises are to be avoided. However, it is worth noting that EU supplies remain relatively tight and current forecasts suggest this will continue. Much of the pig meat which would have been shipped to Russia in the past will find a home in Asia or elsewhere on the global market, due to high prices and lower supplies in the US (the EU’s main competitor on export markets) as a result of PEDv. As a result, any growth in UK imports is likely to be modest.

The shortage of US product will also create opportunities for UK exporters. Having shown strong growth last year, despite the tight supply situation, prospects look good for the year ahead. Relatively high UK prices and the stronger pound will dampen export growth to some extent. Nevertheless, further increases in shipments are likely during the year.

The combination of higher production and increased imports would leave more pig meat available for consumption on the UK market, even allowing for higher exports. However, the forecast rise in availability is relatively modest, roughly the same as the decline recorded last year. The supply situation is, therefore, still relatively tight, especially given that the improving economy may encourage more consumer demand.

May 2014

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